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liq [111]
3 years ago
9

Engineers for The All-Terrain Bike Company have determined that a 15% increase in all inputs will cause a 15% increase in output

. Assuming that input prices remain constant, you correctly deduce that such a change will cause ________ as output increases.
Business
2 answers:
Trava [24]3 years ago
7 0

Answer:

the average cost to reduce

Explanation:

In this situation, when The All-terrain Bike Company increases input (capital and labor) and this causes a proportional increase in output, this scenario The All-terrain Bike Company experiences is called a constant returns to scale which gives rise to decreased average costs.

This happens because buying larger quantity of inputs gives rise to a reduced cost of purchase because these things are being bought in bulk.

ella [17]3 years ago
5 0

Answer:

Average costs to remain constant

Explanation:

In economics, a look at the constant-cost industry reveals that total output can expanded without an increase in the individual firm's average total cost. This is because when input prices remain constant , the long-run supply curve in a constant-cost industry is perfectly elastic.

Also, since 15% increase in all inputs cause a 15% increase in output; such change shows that if input prices remain constant, average costs will remain constant too.

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